IKEA: Managing Cultural Diversity Group Name: UFOs Group Members: Daniela Derflerová Markéta Fialová Barbora Hulínová Jana Kubičíková Olga Šrámková

The IKEA Facts Founded 1953 by Ingvar Kamprad, Sweden Expanded soon abroad Today over 550 millions visitors in close to 300 stores annually Steady growth by 12% a year

Turnover Growth Source: http://franchisor.ikea.com/showContent.asp?swfId=facts9

Number of Stores Source: http://franchisor.ikea.com/showContent.asp?swfId=facts9

IKEA operates in more than 35 countries!!! Current Stores Near Future Stores Source: http://uberpedia.org/wiki/IKEA

The IKEA Way Low costs Long production lines Self-assembly at home Self-transport Convenient boxes Catalogues Remaining Swedish (design, management) Modern ideals (durable, easy to live with, natural and free style, color, joy)

Business Principles Balanced focus on product range, sourcing, cost leadership, distinctive image Studying new consumer trends with regard to possible value added Yin/Yang metaphor Durable partnerships with suppliers based on cooperation and active contribution to both cost reduction and quality enhancements Balanced focus on product range, sourcing, cost leadership, distinctive image, vertical integration, mass marketing and so on Yin/Yang: balance of strategic sourcing and marketing mix Partnerships: willingness of suppliers to comply with Ikea quality standards, Ikeas guaranteed purchase of all parts produced, technical assistence

Management Style and Practices Informal, open and caring management style Hierarchy not emphasized: 3 levels of responsibility Pragmatic approach to problem solving, consensus based decision making, discussion, explanation „learning by doing“ Managers share information, knowledge and skills Coworkers should feel important Eliminating status barrier „learning by doing“: making mistakes is considered a part of this Coworkers should feel important: take part in decision making, can express their ideas Job should be done in the most direct way, disaste for bureaucratic procedures Eliminating status barrier: managers‘ titles do not appear on business cards, company cars are the same economy models for all, regardless of the position

Cultural Diversity Issues: Germany IKEA in Germany since 1974 Conflicts with company‘s culture: „dutzen“= calling co-workers by first names (undermining respect) “Taking on responsibilities for yourself” x need exactly defined rules and instructions Believe Swedish do not assess risks sufficiently, too much result-oriented Love formality Love administration=> sense of security

Cultural Diversity Issues: USA HR point of view: Swedish and American managers Decentralized or centralized organization Responsibility within the organization A way of educating American managers Treating employees (coworkers) ! Ideal IKEA US director – American, who accepts Swedish culture and has a great understanding for the IWAY

Cultural Diversity Issues: USA Local market obstacles: 36 stores opened since 1985 USA culture different to Swedish Problems at the beginning caused by different needs of Americans Problems with IKEA´s culture ! IKEA has to accept a different culture and at the same time keep its own. Otherwise it will either not succeed on the US market or it will not be IKEA anymore

Cultural Diversity Issues: France HR point of view: Informality = sign of weakness or indecisiveness In general they need formality in: rules and hierarchy job descriptions and written procedures formal training better than „learning by doing" not perceived as credible) Minimum of non- French employees (otherwise French customers make complaints- nationalism)

Cultural Diversity Issues: France Other obstacles: Bureaucracy on retail trade Relations with Labor unions- initial distrust in IKEA´s management style which was seeking consensus (The style changed in more affirmative one: the relations have improved) Head of IKEA Jean Luis Baillot (Swedish wife, worked in Älhmult) Different purchasing power (žán luí, bajo)

Comparison of Purchasing Power Source: Damien Badier, Carole Rousset

Advertising Humoristic and chocking style UK: “Stop being so English” Switz.: “Stop being such snobs“ USA: “America is a big country, someone has to furnish it” FR: “The French need more space, more love, more well-being and more purchasing power. For all those reasons, vote IKEA” Sometimes banned http://www.youtube.com/watch?v=NLZMWoOBOoA&feature=PlayList&p=1436C85F22364F0F&index=2

SWOT-IKEA Way To which extent should be kept „The IKEA Way“ approach and to which extent adjustment to foreign market? Strengths Unique image on the local market, Swedish style (modern and simple) Effective strategy in time of global crisis (low costs) Popular among younger generation Quality and eco products at reasonable prices Catalogues- convenient Weaknesses Relatively low adaptation to the local markets (USA) Lack of Swedish managers abroad => need of local competent managers Relatively expensive delivery service Often conflicts on top management level, cultural diversity issues

SWOT-IKEA Way Opportunities Threats Expansion to South America and Asia markets Already well establish brand name Trainee programs Wider range of products Cheaper row materials and labor in time of crisis Threats Global crisis-purchasing power of customers Cheap competition copying IKEA style (low prices, simple design)

Conclusions In the EU countries no need to significantly adjust product portfolio (as opposed to USA) Adjustments needed on managerial level policy- in order to attract the best local managers Introduce attractive Swedish management trainee programs Find a common talk with local managers, take their opinions into account

Thank you for your attention! Any questions??? Thank you for your attention!

Sources IKEA: Managing Cultural Diversity.Integrative Case Badier,D, Rousset,C.Strategies adopted in the international market, The case of IKEA in France.2007.Bachelor Degree Project.University of Skövde http://bizcovering.com/major-companies/ingvar-kamprad-and-ikea/ http://www.ikea.com/ms/en_CA/jobs/join_us/index.html http://www.essays.se/about/The+case+of+IKEA+in+France/ http://www.ikea-group.ikea.com/?ID=11